Plans to cut amount you can save tax free could be counterproductive say ABI.
The Association of British Insurers (ABI) has today urged Government not to punish people who access pension freedoms early by reducing the maximum amount of pension savings that qualify for tax relief – known as the Money Purchase Annual Allowance (MPAA) from £10,000 to £4,000.
Responding to the Government consultation on reducing the MPAA, the ABI said any change was likely to discourage people from saving into their pensions when they are still a long way from retirement. The ABI recognises the concerns the Government has about potential exploitation of tax relief, but is calling for a delay in a decision while further evidence is gathered.
Yvonne Braun, Director of Policy, Long-term Savings and Protection at the ABI, said:
“Reducing the incentives for people to save for their retirement should not be contemplated lightly. People who have used the pension freedoms as intended will be penalised by this change for saving further for their retirement.
“At a time when we are encouraging people to work for longer and to save for their retirement through auto-enrolment, it seems contradictory and counterproductive to limit their options to do so through a reduction in the MPAA.
It is too early to judge the effects of the pensions freedoms in this area, so we are asking the Government to delay its decision until enough evidence becomes available.”
A copy of the ABI’s response to the consultation can be found here.
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Notes for Editors
1. Enquiries to:
Malcolm Tarling 020 7216 7410 Mobile: 07776 147667
Lauren Gow 020 7216 7327 Mobile: 07889 641702
Sarah Cordey 020 7216 7375 Mobile: 07860 189071
2. The MPAA is the maximum amount of savings an individual can make into their pension, which qualify for tax relief, once the individual has already accessed their pension flexibly.
3. The Association of British Insurers is the leading trade association for insurers and providers of long term savings. Our 250 members include most household names and specialist providers who contribute £12bn in taxes and manage investments of £1.6 trillion.
4. An ISDN line is available for broadcast
5. More news and information from the ABI is available on our web site, www.abi.org.uk.